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Official Citation: 2025 IHC 6
Court / Jurisdiction: Islamabad High Court
Year of Decision: 2024
Decision Date: 2024-12-31
Parties: The Imperial Electric Company (Private) Limited vs M/s Zhongxing Telecom JUDGMENT
Ruling Summary: This decision was rendered by the Islamabad High Court on 2024-12-31, officially reported as 2025 IHC 6. In this matter between The Imperial Electric Company (Private) Limited and M/s Zhongxing Telecom JUDGMENT, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2025IHC6
Court Name: Islamabad High Court Judge(s): Miangul Hassan Aurangzeb Title:The Imperial Electric Company (Private) Limited vs M/s Zhongxing Telecom
JUDGMENT
Reported As: 2025 IHC 6, 2024 IHC 274, 2025 CLD 420 Result: Appeal Allowed Judgment
JUDGMENT MIANGUL HASSAN AURANGZEB, J:- Through the instant appeal under Section 39 of the Arbitration Act, 1940 ("the 1940 Act"), the appellant, the Imperial Electric Company (Private) Limited, impugns the order dated 28.11.2023 passed by the Court of the learned Additional District Judge, Islamabad, holding that the arbitration award dated 29.12.2020 that had been filed by the Arbitrator in the said Court was beyond the limitation period provided in Article 178 of the First Schedule to the Limitation Act, 1908 ("Article 178"). 2. The facts essential for the disposal of the instant appeal are that on 07.05.2005, the appellant and the respondent entered into a Contract for the Supply, Installation, Testing, and Commissioning of DG Sets at BTS Sites at Central, North and South Regions of PTCL, CDMA, Wireless Local Loop Project ("the Contract"). Clause 19.2 of the Contract provided a mechanism for the settlement of disputes between the parties. Such disputes were required to be settled by the Chief Executive Officer of the Pakistan Telecommunication Company Limited. For the purposes of this judgment, it is not necessary to detail the events leading to the reference of the disputes between the parties to the Arbitrator. 3. The Arbitrator, on 22.12.2020, issued notices to the parties that he would be announcing the award on 29.12.2020. The admitted position is that the award was announced in the presence of the parties on the said date. Under the said award, the appellant was held entitled to recover from the respondent Rs.33,520,758/- along with interest at the rate of 14% per annum with effect from the date mentioned in the award.
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4. Vide application dated 01.01.2021, the appellant requested the Arbitrator to file the award in the Court of the learned Senior Civil Judge, Islamabad. On 13.01.2021, the award was filed before the learned Civil Court at Islamabad. Thereafter, on 01.11.2021, the respondent filed an application under Section 31 of the 1940 Act praying for the award filed by the Arbitrator to be returned as the learned Civil Court lacked pecuniary jurisdiction to entertain the same or to make it a rule of Court. The said application was contested by the appellant. 5. Vide order dated 24.02.2022, the said application was allowed and the award was returned for its presentation before the Court having pecuniary jurisdiction in the matter. The said order was assailed by the appellant in writ petition No.1784/2022 which was disposed of vide order dated 22.09.2022 in the following terms:- "2. ..., the arbitration proceedings took place which culminated in the rendering of the award dated 29.12.2020. The learned Arbitrator filed the award before the Court of the learned Civil Judge, Islamabad. Respondent No.1 filed an application for the return of the award on the ground that the Court of the learned Civil Judge, Islamabad lacked pecuniary jurisdiction to entertain the award on account of the amendments in the Civil Procedure Code, 1908 made on 18.02.2020. 3. Learned counsel for the contesting parties are in unison on their submission that the learned Arbitrator ought to have filed the award before the Court of the learned District Judge, Islamabad. Letter dated 27.08.2022 from the learned Arbitrator to the learned District Judge, Islamabad also shows that it was on account of a bonafide error that the award was filed in the Court of the learned Civil Judge, Islamabad. Order dated 01.09.2022 passed by the learned Additional District Judge, Islamabad shows that the award presently stands filed before the said Court. Respondent No.1 is at liberty to take all the legal and factual objections to the filing of the award before the said Court. Learned counsel for respondent No.1 has already received notice [as] to the filing of the said award before the Court of the learned Additional District Judge, Islamabad. 4. In view of the above, the impugned order dated 24.02.2022 passed by the learned Civil Judge, Islamabad warrants no interference. 5. Disposed of in the above terms." 6. As can be discerned from the contents of the said order dated 22.09.2022, during the pendency of writ petition No.1784/2022, the appellant addressed letter dated 19.08.2022 requesting the Arbitrator to file the award before the Court of the learned District Judge, Islamabad, and on 01.09.2022 the Arbitrator filed the award before the said Court. 7. On 30.09.2022, the respondent filed an application seeking a declaration to the effect that the award is barred by law. For the purposes of clarity, the prayer clause of the said application is reproduced herein below:- "It is humbly prayed that instant [application] may kindly be accepted and the Award filed by the learned Arbitrator in this Court may kindly be declared as barred by applicable law for the best interest of justice." 8. The primary ground taken in the said application was that the Arbitrator had filed the award beyond the limitation period of ninety days prescribed in Article 178. The appellant contested the said application by filing a written reply. Vide order dated 28.11.2023, the respondent's said application was allowed and it was held that the award filed by the Arbitrator was "barred by law." The said order dated 28.11.2023 has been assailed by the appellant in the instant appeal. 9. Learned counsel for the appellant, after narrating the facts leading to the filing of the instant appeal, submitted that on 11.09.2014, the appellant had instituted a civil suit against the respondent before this Court as at that time this Court was vested with civil original jurisdiction; that after this Court allowed the respondent's application under Section 34 of the 1940 Act and stayed the proceedings in the suit vide order dated 28.12.2015, the case was transferred to the learned Civil
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Court for further proceedings as the civil original jurisdiction of this Court had been done away with; that after the case was transferred to the learned Civil Court, the appellant had filed application under Sections 5, 11 and 12 of the 1940 Act, which was dismissed on 09.04.20218 by the learned Civil Court on merits after an inter parte hearing; that since the proceedings between the contesting parties with respect to the dispute arising from the Contract had taken place before the learned Civil Court, the appellant had reasonable grounds to request the Arbitrator to file the award before the learned Civil Court; that after the learned Civil Court returned the award due to the lack of pecuniary jurisdiction, the Arbitrator filed the award before the Court of the learned District Judge, Islamabad; that the learned Court below erred by declaring that the award filed in his Court was "barred by law"; that the limitation period of 90 days prescribed in Article 178 for filing an award in the Court only applies where an application is filed by a party before the Court praying for the award to be filed in the Court and not when the Arbitrator on the request of a party files the award in the Court; that the Arbitrator, in his letter dated 27.08.2022 to the Court of the learned District Judge, had stated that the filing of the award before the learned Civil Court was a bona fide error as the Code of Civil Procedure (Amendment) Act, 2020 had escaped his notice; and that the entire arbitration proceedings and the award cannot be brought to a naught simply due to the delay in the filing of the award in the Court, and such delay is not in any manner attributable to the appellant. Learned counsel for the appellant prayed for the appeal to be allowed and for the impugned order dated 28.11.2023 to be set aside. 10. On the other hand, learned counsel for the respondent submitted that the appellant, in its application dated 04.01.2021 to the Arbitrator, had specifically requested for the award dated 29.12.2020 to be filed before the Court of the Senior Civil Judge (West), Islamabad; that it was on the basis of the said application that the Arbitrator, on 13.01.2021, filed the award before the learned Civil Court; that vide order dated 24.02.2022, the learned Civil Court returned the award along with the record so that it is filed before a Court having pecuniary jurisdiction to entertain the award; that after the said order dated 24.02.2022, the appellant waited until 19.08.2022 (i.e. more than five months) before applying to the Arbitrator for filing the award before the Court of the District Judge, Islamabad; that the Arbitrator filed the award before the Court of the learned District Judge on 01.09.2022 through letter dated 27.08.2022; that the award filed with such an inordinate delay was grossly time barred; that at no stage did the appellant file an application for condonation of delay in the filing of the award; and that the learned Court below did not commit any illegality by declaring the award to be barred by law. 11. Learned counsel for the respondent further submitted that the instant appeal under Section 39 of the 1940 Act is not maintainable since the impugned order dated 28.11.2023 cannot be held to be an order to "set-aside the award." Learned counsel for the respondent prayed for the instant appeal to be dismissed. 12. I have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance. The facts leading to the filing of the instant appeal have been set out in sufficient details in paragraphs 2 to 8 above and need not be recapitulated. 13. The primary question that this Court needs to determine is whether the arbitration award dated 29.12.2020 filed by the Arbitrator before the Court of the learned District Judge, Islamabad on 01.09.2022 could be declared as "barred by law" on the ground that it was filed beyond the limitation period of 90 days prescribed in Article 178. 14. Section 14(1) of the 1940 Act provides that when the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award. As mentioned above, the award was announced on 29.12.2020. Prior to the announcement of the award, the Arbitrator had given notice to the contesting parties as to the date on which the award
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was to be announced. The parties are not in dispute that on 29.12.2020 they had notice of making and signing of the award. 15. Section 14(2) of the said Act provides that the arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award. 16. Section 14(2) has been variously interpreted as to provide for the arbitrator to file the award in the Court either at the request of any party to the arbitration agreement or if so directed by the Court. Reference in this regard may be made to the law laid down in the case of Oil and Gas Development Company Limited Vs. Muhammad Nazir Khan (2024 CLC 988). 17. In the case at hand, the Arbitrator was prompted by the appellant's application dated 04.01.2021 to file the award before the learned Civil Court on 13.01.2021. Prior to the rendering of the award, the Code of Civil Procedure (Amendment) Act, 2020 ("the 2020 Act") was enacted on 21.02.2020 which resulted in the pecuniary jurisdiction of a Civil Court to be limited to cases where the amount or value of the subject matter of the suit was below 50 million. Section 6(b) of the said Act provided inter alia that "where the amount or value of the subject matter of the suit is above rupees fifty million, the suit shall be filed in the court of District Judge". Although the award dated 29.12.2020 declared the appellant entitled to recover Rs.33,520,758/- from the respondent, the Arbitrator also held that the appellant would be entitled to interest at the rate of 14% per annum from the date of the filing of the suit (i.e. 11.09.2014) till its recovery. This would make the amount recoverable from the respondent under the said award to be in excess of Rs.50 million, which was beyond the pecuniary jurisdiction of the learned Civil Court. It is for this very reason that the learned Civil Court vide order dated 24.02.2022 returned the award so that it is filed before the competent Court. 18. It was not until 19.08.2022 that the appellant applied to the Arbitrator to file the award before the Court of the learned District Judge, Islamabad, and the Arbitrator filed the award before the said Court on 01.09.2022. The appellant had assailed the learned Civil Court's order dated 24.02.2022 in writ petition No.1784/2022, which was disposed of vide order dated 22.09.2022 after the appellant acknowledged that the Arbitrator ought to have filed the award before the Court of the District Judge, Islamabad. In the said order, this Court had also recorded that the Arbitrator, in his letter dated 27.08.2022, had written that he had earlier filed the award before the learned Civil Court due to a bona fide error as the amendment made in CPC through the 2020 Act had escaped his notice. 19. It ought to be borne in mind that at no material stage did the appellant file an application under Section 14(2) of the 1940 Act before the Court for a direction to the Arbitrator to file the award in the Court. The appellant had addressed applications dated 04.01.2021 and 19.08.2022 to the Arbitrator and not the Court for the filing of the award. Therefore, it needs to be determined whether the limitation period provided in Article 178 applies in a case where no application is filed in the Court by a party seeking a direction to the arbitrator to file an award in the Court. The said Article reads thus:- Description of applicationPeriod of limitation Time from which period begins to run Under the Arbitration Act 1940 for filing in court of an award90 days The date of service of the notice of the making the award
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20. The very language of Article 178 shows that it applies to an "application" for the filing of the award in Court. Article 178 applies only to cases where a party to the arbitration proceedings applies to the Court for the filing of an award but it does not apply to an application filed by a party to the arbitrator for filing the award in the Court. An application to have the award filed in Court must be moved by any party within ninety days of the date on which he receives notice of the making of the award. No such application can be made after the expiry of this period. When the award is filed in the Court by the arbitrator, the limitation as may be applicable to a party is not applicable to him. No period of limitation is prescribed for the arbitrator to file the award in the Court. Additionally, no limitation runs against a party to the arbitration proceedings requesting the arbitrator to file the award in the Court. The arbitrator is also not placed under an obligation to file the award in the Court within the limitation period of 90 days prescribed in Article 178. The limitation period under the said Article applies for the purpose of filing an application to the Court for a direction to the Arbitrator to file the award in the Court. I say so on the strength of the following case law:- (i) In the case of Muhammad Shafi Vs. Muhammad Sabir (PLD 1960 (W.P.) Lahore 591) it was held as follows:- "5. A critical reading of section 14 of the Arbitration Act makes it perfectly clear that after an award is given any party to the arbitration agreement or any person claiming under such party may request the arbitrator or the umpire to cause the award or a signed copy thereof together with any deposition or document which may have been taken and proved to be filed in Court. The "Court" means the Civil Court having jurisdiction to decide the question forming the subject- matter of the reference. Such Court can also direct the arbitrators or the umpires to cause the award or a signed copy thereof to be filed in Court. No limitation has been provided by the Limitation Act for any party to the arbitration agreement to request the arbitrator or the umpire to cause the award to be filed in Court nor is there any limitation prescribed in the Limitation Act for the arbitrators or umpires to cause the award to be filed in Court upon such request. If a party to the arbitration agreement does not make a request to the arbitrator or umpire for filing the award in Court, it can directly come to the Court and request it to order the arbitrator or to umpire to file the award or a signed copy thereof in Court. Such an application will be governed by Article 178 of the Limitation Act if notice of the award has been given to the applicant, as provided by Subsection (1) of section 14." (Emphasis added) (ii) In the case of Sindh Industrial Trading Estates Vs. Sindh Employees Social Security Institution (1993 MLD 1258) the Hon'ble High Court of Sindh held that "no period of limitation would be applicable in a case where the award is filed in the Court by the Arbitrator himself because the Arbitrator does not seek relief against any party and the language used in the Schedule to the Limitation Act clearly suggests that the period of limitation prescribed therein would be applicable only when an application has been made by a party." (iii) In the case of Vaseem Construction Co. Vs. Province of Sindh (1991 CLC 1081) it was held that "Article 178 would not be applicable where the award is filed by the arbitrator himself." (iv) The law laid down in the case of Muhammad Shafi Vs. Muhammad Sabir (supra) was reiterated by the Hon'ble High Court of Sindh in the case of Besrock (Pvt.) Ltd. Vs. Pakistan Steel Mills Corporation (2013 CLD 719), wherein it was held as follows:- "No limitation has been provided by the Limitation Act for any party to the arbitration agreement to request the arbitrator or umpire to cause the award to be filed in court nor is there any limitation prescribed in the Limitation Act for arbitrator or umpire to cause the award to be filed in court upon such request. If a party to the arbitration agreement does make a request to the arbitrator or umpire it can directly come to the court and request it to order arbitrator or the
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umpire to file the award or a signed copy thereto. Such application will be governed by Article 178 of the Limitation Act, if notice of the award has been given as provided under subsection (1) of section 14 of the Arbitration Act, but if no notice is given then the only request which would be attracted is to be residuary Article 181 of the Limitation Act, which provides a party three years from the date when right to apply accrues." (v) In the case of Telecom Foundation Vs. Asko Enterprises (2020 CLC 1605), I had the occasion to hold as follows:- "It is also well settled that Article 178 of the First Schedule to the Limitation Act, 1908 applies to applications made by a party under Section 14(2) of the 1940 Act. There is no time limit for the arbitrator or umpire to file the award in the Court. The application contemplated by Article 178 ibid does not apply to such filing by the arbitrator or umpire on their own." (vi) In the case of Champalal Vs. Mst. Samrathbai (AIR 1960 SC 629) the award dated 18.10.1946 was filed in the Court on 21.10.1946 by the Arbitrators. Since the award was unregistered, it was handed over on the request of the respondent for getting it registered. The process of registration consumed considerable time. On 14.10.1948, an application under Section 14(2) of the 1940 Act was filed in the Court. After the Court rejected the objections to the award, it was made a rule of Court. On appeal, the High Court held that the application filed by the respondent on 15.09.1948 under Section 14(2) of the 1940 Act was not within time but the original application filed by the Arbitrators on 21.10.1946 was within time, and therefore, the appeal was dismissed. One of the grounds taken in the appeal before the Supreme Court of India was that the filing of the award was not within time as no application was made under Section 14 within the time provided in the Limitation Act. It was also held that "Article 178 of the Limitation Act which was relied upon by the appellant applies to applications made by parties and not the filing of the award by the arbitrators." Consequently, the appeal was dismissed. (vii) In the case of Balwant Singh Vs. Partap Singh (AIR 1968 Punjab & Haryana 265) it was held that the arbitrator need not to make an application to the Court for permission to file the award, and that he can just file the award without making an application. An application filed by the arbitrator to file the award in the Court was held to be mere surplusage and therefore no question of dismissing such an application on the ground that it was barred by limitation could arise. (viii) In the case of Hoora Vs. Abdul Kareem (AIR 1970 Rajhastan 22) it was held that where an award is filed in the Court by a party under the authority of the arbitrators or the arbitrators themselves caused it to be filed in the Court at the request of a party, Article 178 of the Limitation Act is not applicable to it. Furthermore, it was held that Article 178 ibid is only applicable where the award is filed on an application made by a party under Section 14(2) on the instructions of the Court. (ix) In the case of Babu Nazir Ahmad Vs. M/s. Premsukh Shyamsukh & Sons (AIR 1987 Madhya Pradesh 240) it was held as follows:- "Learned counsel for the appellant had faintly argued that the award had not been filed in the Court within the time prescribed by law. Suffice it would to mention that since the award had been filed by the arbitrator, the limitation as may be applicable to a party would not be applicable in the instant case. That objection, therefore, stands rejected." 21. Much emphasis was laid by the learned counsel for the respondent on the judgment in the case of Muhammad Mushtaq Saigal Vs. Muhammad Wasi Saigal (2001 SCJ 97) in support of his contention that the award filed by the arbitrator on 27.08.2022 in the said case before the Court of the learned Additional District Judge was barred in terms of Article 178. In the said case, the arbitrator rendered the award on 23.01.1986 in the presence of the parties and delivered a copy of the award to each of them. The respondent filed an application before the High Court of Sindh
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under Section 14(2) of the 1940 Act seeking a direction to the Arbitrator to file the award in the Court. The said application was resisted on the ground that it was barred by time in terms of Article 178. The Hon'ble High Court dismissed the application by holding that in the absence of service of notice by the arbitrator under Section 14(1), the period of limitation under Article 178 could not be computed from the date of the award. The Hon'ble Supreme Court, however, held that factually there was a notice in writing of making and signing of the award to the parties as they had signed the diaries maintained by the arbitrator on the day the award was signed. On this basis, it was held that the application under Section 14(2) was barred by time in terms of Article 178. 22. What must be appreciated is that in the case of Muhammad Mushtaq Saigal Vs. Muhammad Wasi Saigal (supra), what the Hon'ble Supreme Court held was that the application filed by the respondent before the Court under Section 14(2) of the 1940 Act was beyond the limitation period provided in Article 178. This judgment would have no application in the case at hand since at no material stage did the appellant file an application before the Court under Section 14(2) for a direction to the arbitrator to file the award in the Court. In the case at hand, it is the arbitrator who, on 29.12.2020, filed the award before the Court of the learned District Judge, Islamabad without any direction having been issued by the Court to the arbitrator to do so. 23. Learned counsel for the respondent also placed reliance on the judgment in the case of Rambilas Vs. Durga Bijai Prasad (AIR 1965 Patna 239) wherein it was held as follows:- "It is true that Art. 178 of the Limitation Act, 1908 (and now Art. 119 of the Limitation Act of 1963) does not, in terms, apply to the filing of the award by the arbitrators…
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